Assuming the lots are the same size, which they generally are in many areas (lots are resold), a 60% increase in house should be ~60% increase in price, not 4x

Assuming the lots are the same size, which they generally are in many areas (lots are resold), a 60% increase in house should be ~60% increase in price, not 4x or 10x. > 1000 sq ft houses that sell for $40k > because nobody wants a house that small a 1000sqft house in Palo Alto would sell for >$400K just for the land. It would be a "teardowns", and a $40 house+lot would be converted to a $300k 2600 sqft houses -- quite reasonable, so the explanation lies elsewhere (access to employment, entertainment, educations?)